Attempt to pay cash dividends to common stockholders, Financial Management

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Are there any legal factors that could restrict a corporation in its attempt to pay cash dividends to common stockholders?  Explain.

A firm may be lawfully restricted as to the dividends it can pay by existing bond indentures or loan agreements.  It may as well be restricted as to the payment of common stock dividends is scheduled preferred stock dividends haven't been paid.

 

 


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